Local tech company lands venture capital/ $12.5 million investment

0 Comments | Gazette, The (Colorado Springs), Jul 29, 2003 | by CHRIS WALSH

One Colorado Springs company received an infusion of money in the second quarter as venture capital investments nationwide stabilized after 12 consecutive quarterly declines, according to a report to be released today.

In Colorado, the amount of money invested during the second quarter came roaring back, hitting its highest level in nearly two years.

Included in that is a $12.5 million investment in Springs based software developer Intelliden Corp.

Intelliden is the first local company to land venture funding since the third quarter of 2002, according to the Money Tree report, by PricewaterhouseCoopers, Venture Economic and the National Venture Capital Association.

Venture capital refers to a private investment in a company. The investors typically take an ownership stake in the firm they are investing in. Tracking venture capital is important because businesses that get the money use it to grow and release products.

The number and dollar amount of venture investments in local companies has dipped precipitously since 2001, mirroring the national trend.

Investors lost money when the high-tech bubble burst, and they are much more careful with their money.

Last year, local firms received about $25 million, compared with $62 million in 2001 and more than $100 million in 2000, according to the report.

"I would say we're back to a pretty healthy but traditional environment of self-funding and friends and family funding until you have successes . . . that imply company development as well as market acceptance," said Peter Skalla, president and chief investment officer at investment management firm Monument Capital Inc.

"Having a product and showing some great technology isn't enough. You have to show progress towards commercialization as well."

The Money Tree report, issued quarterly, tracks venture capital investments nationwide. It includes investments by U.S. and foreign firms but sometimes does not include data from smaller venture companies.

In Colorado, venture capital investments spiked 45 percent from a year ago and nearly 50 percent from the first quarter of this year.

Investors pumped $230 million into 18 Colorado companies in the second quarter of 2003. Telecommunications led the way, garnering $177 million in investments.

Most of the money invested in Colorado went to companies that have been around for afew years and previously received money.

"Investors are looking for proven technologies or services," said Matt Kosmicki, technology partner at PricewaterhouseCoopers in Denver. "As you're farther along in the life cycle and prove your concept, investors are more willing to put money in."

Nationally, investments fell 28 percent from a year ago but rose slightly compared to the first quarter.

HIGHLIGHTS

Second quarter 2002 Money Tree highlights:

In Colorado

Eighteen companies received $230 million during the second quarter - the fourth-highest nationwide.

Telecommunications companies led investments by securing $177 million.

The largest investment in Colorado was a $156 million infusion into Englewood-based WildBlue Communications, which provides broadband services.

Nationally

Nearly 670 companies received $4.3 billion in the second quarter. That's down from 826 companies that received nearly $6 billion in the same period last year.

The software industry attracted 20 percent of venture capital. Biotechnology was second with 14.4 percent.